Monday 15 June 2015

How to put a spin that majority of CPF investors lost money!

First things first.

I did not say it. Official media says so:

Wish you had transferred that excess money to SA, didn't you?

That means only 15% of CPF investors have earned the right to KPKB at Hong Lim Park?

Walk down memory lane (Context and Perspective)

1 May 1986 : Approved Investment Scheme (AIS) introduced. Members are allowed to use up to 40 percent of their CPF savings to buy gold, shares, unit trusts and stocks.

1 Oct 1993 : The Basic Investment Scheme (BIS) and the Enhanced Investment Scheme (EIS) were introduced to replace the Approved Investment Scheme. Members are allowed to set aside a higher portion of their CPF savings (80 percent) for approved investments.

1 Jan 1997 : The Basic Investment Scheme (BIS) and the Enhanced Investment Scheme (EIS) were merged to form the CPF Investment Scheme (CPFIS).

If I'm a Property agent...

To clients who vacillate between investing in properties or equities, I'll ask them to verify with their peers, parents, etc; this simple question:

For each CPF dollar spent on their HDB or private properties, compare it with their equivalent CPF dollar performance they had "invested" under the various AIS, EIS, CPFIS schemes.  

The statistical odds are on my side. Wink.

If I'm a Remisier...

1986 till today, how many years do we need before it's considered "long term" investing?

OK, if we want to split hairs, we throw out AIS and EIS. We only consider CPIS.

1997? Isn't that the Asian Financial Crisis? Starting at the low doesn't help after 18 years?

We just had a 6 years bull market since March 2009. I would have thought there's more tail wind support!?

What happen to the fabled equities will likely "grow" 8% per year mantra? 

Look, if more retail clients stick with buy and hold or switch to passive indexing, I'll go in the way of the dodo birds too...

Now its the time to "educate" my clients on how to be nimble!

Avoid using words like trading or speculating. Some clients have a Pavlov revulsion to these words. Yes, nimble is a good word. While I'm at it, I'll slip in the art of "shorting". I'll just call it - "Flying with both wings". I'm good or what?

Just as long my clients do the nimble dance, the sun will not set on me yet. Not during my watch anyway!

If I'm an Insurance agent

Buy term invest the rest?

Just as long the Wholelife and Endowment policies I'm touting outperform the CPF 2.5% interest, I'm good to go! 

I'll avoid ILPs though as they will likely come back to bite me... Repeat business and referrals are my life blood. One time carrot-head chopping deals are more for Sim Lim snake oils... I'll pass. Thank you very much!

If I'm into Personal Finance education

I must get a hold on the name list of those 85% who under performs the "low" CPF hurdle rate of 2.5% interest!!!

Buy me a drink?

Anyone interested to hire a 2nd rate has-been snake oil like me on a freelance consultancy basis?

Don't worry. My fees are cheaper than foreign talents (or non talents).

Just buy me a drink and I'll sing for you like a canary!

Let's sell ice to Eskimos!


  1. now market abit bear so publishing this article around this time will be more losses for an average investor

    why dont they publish this during bull market?

    1. Jimmy,

      1) Using March 2009 as index 100, we are still in a Bull market no matter how we cut and slice it ;)

      2) We have not even had a 10% correction from the recent high of 3500+ yet...

      3) Never mind a minus 20% plain vanilla bear market... (Now we're talking!)

      4) Anyone who is "anxious" on a paper cut now may want to reassess whether they are suitable to be in the markets... It's still early days!

      5) Just do a simple stress test and mark down our portfolios by 20% and assume we will lose our jobs for 6 months. Our new job will have a 20% pay cut. If our day to day living is not affected, well, move along now, nothing to see...

      6) It does not matter who says what or when. What matters most is whether we can say to ourselves with conviction:

      "I know myself".

      高山不动, 流水不安

  2. Hi SMOL,

    HAHA, this is exactly what I'll rolep lay with my wife sometimes :) She'll give a scenario, and we'll take turns to see the good or the bad side of things from the perspective of different parties. It's a great exercise at learning gratitude and also detecting bull shit :)

    1. LP,


      I like role-play too! My favourite is the visiting plumber and she the bored housewife.

      Wait... Opps! Wrong kind of "role-play"... So embarrassing!!!

      It's good practice to try and see things from the other perspectives. This helps in preventing us from having an "I am the centre of the universe" attitude ;)

    2. I want to be the pizza delivery boy ....haha

  3. Hi SMOL,

    The problem starts when fresh grad with fresh CPF account meets fresh PFC. All the fresh add up somehow becomes rotten sometimes! The blind leading the blind.

    I invested >10k of my CPF OA in funds.... until now, no win no lost.... reason for the investment is I do not want my CPF to be wiped out upon buying house. So that if I go out of job, I still can sell the investments and OA topped up with >10k, house still get paid with no job. SAFER!

    1. Rolf,

      It's hard enough when its just insurance touting for a fresh salesperson...

      Adding investments and retirement planning into the mix is simply - "I've no clue myself, but I recommend you.. x 3 times more potent! LOL!

      The silver lining is for a fresh graduate, how much money can we lose to "best intentions"?

      When we hit our late 30s or early 40s, with serious money to burn, at least we'll know what NOT to do!

      It sorts of balance out. Just treat it as inoculation against later years poor financial decision making ;)

      Good move on the CPF!

      I often poke on "poor" goal settings and planning because often they were either based on shaky foundations, poor understanding of self, and often based on best case scenarios!?

      You're the first person I know who takes into account "what if I lose my job" ;)

      Maybe our humble background helps. We've experienced Money not Enough periods during our childhood ;)

  4. I am the lucky 15% who earns more interest than oa! So proud. How I did it? I bought a stock and sell at 15% profit in a month. Then I stopped investing my oa. So my investment accrual interest is always negative! (Which mean I beat cpf interest). Cheat code.

    1. Frugal_Daddy,

      Of course you must take pride in what you do! Out performance is still out performance mah!

      Don't belittle what you did.

      For those who like to count in %, your 15% profit is the equivalent of 6 years of 2.5% in simple interest terms (I no clue how to calculate in compound interests, so let's keep it simple).

      For the win!

      If people survey you:

      "Did you invest with CPF?"


      Did you out perform the CPF 2.5% interest rate?"


      Don't say anything else!!! Just smile :)


    2. I start to like you even more. Lol. No worry, I am married to my lovely wife.

    3. I don't care you single or married; just as long you respect the invisible force field between men.


  5. I am of those who suffered losses from investing in unit trust from the OA fund. $10k losses after taking into consideration of the accrued interest (from Jan 2007 till to date).


    1. Ben,

      Hopefully, its a case of 先苦后甜 for you.

      That's why I don't encourage or dissuade others to do investing.

      Everyone has to walk their own investment paths themselves.


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